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D the extra payment to labor that occurs following

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D) the extra payment to labor that occurs following imposition of a quota. 16. If a quota license is awarded to a domestic firm without an auction, it may generate bribes or lobbying spending to earn this revenue. Economists call this a(n) ____ activity. A) efficient B) unnecessary C) wasteful rent-seeking D) profit-maximizing 17. One way to fairly distribute quotas, while getting revenue for the government, is to: A) auction quotas in a public sale to the highest bidder. B) conduct a lottery for quotas for the lucky winner. C) allow Congress to allocate quotas among their constituents. D) allocate quotas based on output. 18. In the 1980s the United States negotiated a voluntary export agreement with Japan in which each Japanese auto producer voluntarily agreed to reduce the number of its automobiles exported to the United States. This voluntary export agreement caused each Japanese auto producer to: A) raise the prices of their automobile exports to the United States. B) lower the prices of their automobile exports to the United States. C) not change the prices of their automobile exports to the United States. D) increase the number of automobiles exported to the United States. Page 6
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19. Countervailing duties are used to offset any advantages that foreign exporters might gain over domestic producers because of foreign: A) tariffs. B) subsidies. C) industry protection. D) quotas. Use the following to answer questions 20-22: SCENARIO: FAR NORTH CANADIAN LUMBER Suppose that Far North Canadian Lumber, Ltd., sells lumber in Canada at a price of $1,000 per 1,000 board feet and exports the same lumber to the United States at a price of $600 per 1,000 board feet. U.S. Lumber, Inc., produces and sells lumber for $700 per 1,000 board feet in the United States. 20. (Scenario: Far North Canadian Lumber) Is Far North Canadian Lumber “dumping” lumber in the United States? A) Yes, because its price in Canada is greater than its price in the United States. B) Yes, because its price in Canada is greater than U.S. Lumber's price. C) No, because its price in the United States is less than U.S. Lumber's price. D) No, because it is maximizing its profits when it price discriminates between the United States and Canada. 21. (Scenario: Far North Canadian Lumber) How large an antidumping duty will the United States apply to lumber imports from Far North Canadian Lumber, Ltd.? A) $100 B) $200 C) $300 D) $400 22. (Scenario: Far North Canadian Lumber) What might Far North Canadian Lumber, Ltd., do to avoid the antidumping duty? A) appeal to the U.S. International Trade Commission B) raise its price in the Canadian market C) raise its price in the U.S. market D) lower its price in the U.S. market Page 7
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23. A monopolist's price is “less than fair value” when it: A) sells in export markets at prices above prices in its domestic markets or at prices greater than its average costs of production. B)
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